IU families face financial woes

Each semester, about 200 families facing hardships like death, illness and job losses consult with assistant bursar Janet Flynn. Affected families may be allowed to spread students' school expenses over a longer period.\nThis year, stock prices dropped, job growth was stagnate and IU tuition rose. But Flynn says she has seen no increase in hardship families.\n"I don't think there's any large difference I've seen," she said.\nWhile some national media report on students' financial crises caused by the country's economic problems, there are few visible signs in Bloomington of financial disasters forcing undergraduates out of college. And experts and statistics suggest there are a few.\nThis fall, according to the IU Budget Office's report, the Bloomington campus enrolled 29,768 undergraduates, up 2.2 percent from last fall's 29,125. The credit hours they registered also grew 2.5 percent to 435,522 from 424,753, suggesting a rise in tuition spending.\nPublic and private gift aid is on a steady climb. That must be helping many undergraduates pay for school, said Bill Ehrich, associate director of the Office of Student Financial Assistance. In fiscal year 2000-01, undergraduates in Bloomington got $50.8 million in grants and scholarships, according to the IU Budget Office's tracking of their bursar accounts. That's a 60-percent rise from the $31.7 million in fiscal year 1995-96. This year Ehrich expects continued growth.\nIn-state undergraduates in need must have little trouble staying at IU, with need-based federal and state and school grants and loans, Ehrich said. The state gives no aid to out-of-state undergraduates in need, but they get federal aid.\n"Anyone who applies for the financial aid is offered something," as long as one's financial need meets federal requirements, Ehrich said.\nGeneral-study freshman Neil Michalares has $8,000 in state and federal grants. He recalls no trouble landing the grants. Junior Brad Marr has won federal grants and loans worth $5,000. Getting them wasn't difficult, he said.\n"That's the same as the last year and the year before," Marr said. \nThe same is true with senior Melissa Pudny, who just secured $2,700 in federal loans. "It's always been very easy to get it," she said.\nWith stock markets falling, some parents saw a steep value decline in funds they planned to use for college expenses, so they telephoned the financial assistance office and pleaded for aid for their students, Ehrich said. Those calls didn't surge suddenly, but have gradually increased as stock markets softened.\nTax-free college-savings plans may wreak no financial havoc, said Mark Dollinger, undergraduate program chair of the Kelley School of Business. Those plans assume one slice of a family's college-savings portfolio, not the entire pie.\nBut the majority of IU undergraduates are from middle or upper-middle class families, Ehrich said. These families normally invest in stocks for retirement, he said. It's possible that after stock markets dived, some of them may be investing less in college funds for their students.\nYet their income bracket stays the same, Ehrich said. Their kids remain unqualified for need-based financial aid.\nTo stay in school, these students may borrow federal student loans with historically low interest rates, said Susan Pugh, director of the financial assistance office. \n"Remember, students can get federal loans without demonstrating financial need," she said.\nEarly July, the U.S. Department of Education set an all-time-low interest rate of 3.46 percent to federal Stafford loans. And the rate for students in their repayment periods became 4.06 percent, the lowest in history.\nIn fiscal year 2000-01, IUB students borrowed $41.2 million in non-need-based student loans, which includes unsubsidized Stafford loans and Supplemental Loans to Students, the Budget Office's reports show. That's a 38-percent increase from $29.9 million borrowed in fiscal year 1995-96.\nLow interest rates are also seen in private loans like the Sallie Mae Parent Loan for Undergraduate Students (PLUS), which lets parents borrow the full education cost, Ehrich said. According to the Web site of the education-funding provider Sallie Mae, PLUS loans borrowed between July 2002 and June 2003 have an interest rate of 4.86 percent, an all-time low.\n"The difference in career earnings for a college grad over a non-grad is tremendous," Dollinger said. "So spending money on higher education makes sense."\nGrowing part-time jobs may offer additional help, said Jan Nickless, who overseas the IU Student Employment Office. Between July 1999 and September 1999, the office saw 558 local employers posting 1,362 part-time jobs to its list, she said. The same period this year had 4,987 part-time jobs posted, though employers shrank to 478.\nThe increase can be due to full-time employers replaced with cheaper temporary staff. "I don't like to see that, but it's the reality," Jan said.\nIU tuition ranked the 4th cheapest among Big-10 schools excluding Northwestern University in 2001, as the IU Factbook shows. But Mary Anderson, director of admissions, said, "I think it's almost impossible for students in today's world to pay their college expenses completely." \nSince 1990, IU has doubled the yearly tuition for full-time undergraduates from $2,272 to $4,573, the IU Budget Office's report shows. That exceeds the 41-percent rise in the Consumer Price Index, the nation's main inflation gauge.\nFor the near future, low-interest loans may remain valuable for undergraduates, Ehrich explained. If economic growth slows, more undergraduates will enroll with more credit hours. Needs for aid will rise. With grants limited, some students will get nothing. If without parents supporting, then, they will need loans.\nAlso, those loans will help get over with another possible recession, which could add to the financial burden of undergraduates as it usually accompanies tuition jumps, Ehrich said.\nSince 1980, IU tuition has jumped over 10 percent three times, according to the data gathered by the IU Budget Office. All came in the recession years: 1982 with 14.9 percent; 1983 with 15 percent; 1991 with 13 percent. The state of Indiana refused to run enough debts to cover declining tax revenue; it reduced education subsidies and caused IU to raise tuition, economics professor William Becker said.\nMacroeconomists generally see a slow economic growth ahead, economics professor Eric Leeper said. But U.S. invasion of Iraq might alienate other oil-producing nations in the Middle East, cause oil prices and then production costs to rise, and trigger another recession.\n"I have no idea what the probability is … but I believe that probability is non-negligible," Leeper said.\nIn recession or not, a moderate increase in tuition is a sure thing, said Bill Stephan, IU vice president for public affairs and government relations.\n"President Brand has indicated that in all likelihood, tuition will continue to increase, given world-wide competition for high-performing faculty, a sluggish state economy, the need to continue our investments in science and technology, and rising health and energy costs"